Smart Betas and derivatives well and good, but ETFs guys, why not start at the beginning?

By Alec Hogg

Grindrod’s Coreshares hosted its inaugural ETF conference yesterday. I sat in for the afternoon and was suitably impressed at the deepening sophistication of participants in this rapidly developing market. Panellists and the audience were comfortable discussing highly complex investment strategies and portfolio structure. It was a great advert for the First World slice of the South African economy.

But on reflection, I wondered whether in the excitement of rapid growth the nascent ETF sector isn’t missing the big opportunity. GG Alcock estimates Stokvels have around R44bn stashed away in coffee tins hidden in members’ homes. Millions of other South Africans are confused by the stock exchange and need help understanding the most basic ETF like the Satrix 40. Both are obvious opportunities for the people in the room yesterday.

The best place for any industry to start is at the beginning. ETFs have of late been scoring huge gains against active managers, of whom only 20% beat the market last year. Could there ever be a better time for for them to really popularise the concept by taking it to “the people”?

From Biznews community member Peter Urbani

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